Land and Buildings Transaction Tax (Scotland) Act 2013

• (b) in pursuance of, or in connection with, arrangements made before the end of that period.

25

This paragraph applies to a chargeable interest—

• (a) that was acquired by the buyer under the relevant transaction, or

• (b) that is derived from a chargeable interest so acquired,

and that has not subsequently been acquired at market value under a chargeable transaction for which relief under this schedule was available but not claimed.

Case where relief not withdrawn: seller leaves group

26

Relief under this schedule is not withdrawn where the buyer ceases to be a member of the same group as the seller because the seller leaves the group.

27

The seller is regarded as leaving the group if the companies cease to be members of the same group by reason of a transaction relating to shares in—

• (a) the seller, or

• (b) another company that is above the seller in the group structure and as a result of the transaction ceases to be a member of the same group as the buyer.

28

But if there is a change in the control of the buyer after the seller leaves the group, paragraphs 13 to 19 and 22 to 25 have effect as if the buyer had then ceased to be a member of the same group as the seller.

29

Paragraph 28 does not apply where—

• (a) there is a change in the control of the buyer because a loan creditor (within the meaning given by section 453 of the Corporation Tax Act 2010 (c.4)) obtains control of, or ceases to control, the buyer, and

• (b) the other persons who controlled the buyer before the change continue to do so.

30

There is a change in the control of the buyer if—

• (a) a person who controls the buyer (alone or with others) ceases to do so,

• (b) a person obtains control of the buyer (alone or with others), or

• (c) the buyer is wound up.

31

For the purposes of paragraph 30 a person does not control, or obtain control of, the buyer if that person is under the control of another person or other persons.

Withdrawal of relief in certain cases involving successive transactions

32

Where the following conditions are met, paragraphs 13 to 31 have effect in relation to the relevant transaction as if the seller in relation to the earliest previous transaction falling within paragraph 37 were the seller in relation to the relevant transaction.

33

The first condition is that there is a change in control of the buyer.

34

The second condition is that the change occurs—

• (a) before the end of the period of 3 years beginning with the effective date of the transaction which is exempt from charge by virtue of this schedule (“the relevant transaction”), or

• (b) in pursuance of, or in connection with, arrangements made before the end of that period.

35

The third condition is that, apart from paragraph 32, relief under this schedule in relation to the relevant transaction would not be withdrawn under paragraph 13.

36

The fourth condition is that any previous transaction falls within paragraph 37.

37

A previous transaction falls within this paragraph if—

• (a) the previous transaction is exempt from charge by virtue of this schedule or schedule 11 (reconstruction relief and acquisition relief),

• (b) the effective date of the previous transaction is less than 3 years before the date of the change mentioned in the first condition,

• (c) the chargeable interest acquired under the relevant transaction by the buyer in relation to that transaction is the same as, comprises, forms part of, or is derived from, the chargeable interest acquired under the previous transaction by the buyer in relation to the previous transaction, and

• (d) since the previous transaction, the chargeable interest acquired under that transaction has not been acquired by any person under a transaction that is not exempt from charge by virtue of this schedule or schedule 11 (reconstruction relief and acquisition relief).

38

Paragraph 33 does not apply where—

• (a) there is a change in the control of the buyer because a loan creditor (within the meaning given by section 453 of the Corporation Tax Act 2010 (c.4)) obtains control of, or ceases to control, the buyer, and

• (b) the other persons who controlled the buyer before the change continue to do so.

39

If two or more transactions effected at the same time are the earliest previous transactions falling within paragraph 37, the reference in paragraph 32 to the seller in relation to the earliest previous transaction is a reference to the persons who are the sellers in relation to the earliest previous transactions.

40

There is a change in the control of a company if—

• (a) a person who controls the company (alone or with others) ceases to do so,

• (b) a person obtains control of the company (alone or with others), or

• (c) the company is wound up.

Interpretation

41

For the purposes of paragraphs 20 and 27 a company is “above” the seller in the group structure if the seller, or another company that is above the seller in the group structure, is a 75% subsidiary of the company.

42

In this Part of this schedule—

• “control” is to be interpreted in accordance with sections 450 and 451 of the Corporation Tax Act 2010 (c.4) (but see paragraph 31),

• “relevant associated company”, in relation to the buyer, means a company that—is a member of the same group as the buyer immediately before the buyer ceases to be a member of the same group as the seller, andceases to be a member of the same group as the seller in consequence of the buyer so ceasing.

PART 4 — Interpretation

When are companies members of the same group?

43

Companies are members of the same group if one is the 75% subsidiary of the other or both are 75% subsidiaries of a third company.

When is a company a subsidiary of another company?

44

A company (A) is the 75% subsidiary of another company (B) if B—

• (a) is beneficial owner of not less than 75% of the ordinary share capital of A,

• (b) is beneficially entitled to not less than 75% of any profits available for distribution to equity holders of A, and

• (c) would be beneficially entitled to not less than 75% of any assets of A available for distribution to its equity holders on a winding-up.

45

For the purposes of paragraph 44(a)—

• (a) the ownership referred to is ownership either directly or through another company or companies,

• (b) the amount of ordinary share capital of A owned by B through another company or companies is to be determined in accordance with sections 1155 to 1157 of the Corporation Tax Act 2010 (c.4).

46

“Ordinary share capital”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company.

47

Chapter 6 of Part 5 of the Corporation Tax Act 2010 (c.4) (group relief: equity holders and profits or assets available for distribution) applies for the purposes of paragraph 44(b) and (c) as it applies for the purposes of section 151(4)(a) and (b) of that Act.

48

But sections 171(1)(b) and (3), 173, 174 and 176 to 178 of that Chapter are to be treated as omitted for the purposes of paragraph 44(b) and (c).

Other definitions

49

In this schedule—

• “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable,

• “company” means a body corporate.

SCHEDULE 11

PART 1 — Introductory

Overview

1

• (1) This schedule provides for relief for certain transactions in connection with the reconstruction and acquisition of companies.

• (2) It is arranged as follows—

• Part 2 provides for when reconstruction relief is available,

• Part 3 provides for when acquisition relief is available,

• Part 4 provides for when the relief is withdrawn,

• Part 4A provides for recovery of tax where relief is withdrawn,

• Part 5 defines expressions used in this schedule.

PART 2 — Reconstruction relief

The relief

2

A land transaction is exempt from charge if—

• (a) it is entered into for the purposes of or in connection with the transfer of an undertaking or part of an undertaking, and

• (b) the qualifying conditions are met.

Qualifying conditions

3

The qualifying conditions are—

• (a) that a company (“the acquiring company”) acquires the whole or part of the undertaking of another company (“the target company”) in pursuance of a scheme for the reconstruction of the target company,

• (b) that the consideration for the acquisition consists wholly or partly of the issue of non-redeemable shares in the acquiring company to all shareholders of the target company,

• (c) that after the acquisition has been made—

• (i) each shareholder of each of the companies is a shareholder of the other, and

• (ii) the proportion of shares of one of the companies held by any shareholder is the same, or as nearly as may be the same, as the proportion of shares of the other company held by that shareholder,

• (d) that the acquisition—

• (i) is effected for bona fide commercial reasons, and

• (ii) does not form part of arrangements the main purpose, or one of the main purposes, of which is the avoidance of liability to the tax.

4

Where the consideration for the acquisition consists partly of the issue of non-redeemable shares as mentioned in the qualifying condition (b), that condition is met only if the rest of the consideration consists wholly of the assumption or discharge by the acquiring company of liabilities of the target company.

5

If, immediately before the acquisition, the target company or the acquiring company holds any of its own shares, the shares are treated for the purposes of qualifying conditions (b) and (c) as having been cancelled before the acquisition (and, accordingly, the company is to be treated as if it were not a shareholder of itself).

PART 3 — Acquisition relief

The relief

6

• (1) This paragraph applies where—

• (a) a land transaction is entered into for the purposes of or in connection with the transfer of an undertaking or part of an undertaking, and

• (b) the qualifying conditions are met.

• (2) The tax chargeable in respect of the transaction is the prescribed proportion of the tax that would otherwise be chargeable but for this paragraph.

• (3) The prescribed proportion is such proportion as may be prescribed by the Scottish Ministers by order.

Qualifying conditions

7

The qualifying conditions are—

• (a) that a company (“the acquiring company”) acquires the whole or part of the undertaking of another company (“the target company”),

• (b) that the consideration for the acquisition consists wholly or partly of the issue of non-redeemable shares in the acquiring company to—

• (i) the target company, or

• (ii) all or any of the target company's shareholders,

• (c) that the acquiring company is not associated with another company that is a party to arrangements with the target company relating to shares of the acquiring company issued in connection with the transfer of the undertaking or part,

• (d) that the undertaking or part acquired by the acquiring company has as its main activity the carrying on of a trade that does not consist wholly or mainly of dealing in chargeable interests,

• (e) that the acquisition—

• (i) is effected for bona fide commercial reasons, and

• (ii) does not form part of arrangements the main purpose, or one of the main purposes, of which is the avoidance of liability to the tax.

8

Where the consideration for the acquisition consists partly of the issue of non-redeemable shares as mentioned in qualifying condition (b), that condition is met only if the rest of the consideration consists wholly of—

• (a) cash not exceeding 10% of the nominal value of the non-redeemable shares so issued,

• (b) the assumption or discharge by the acquiring company of liabilities of the target company, or

• (c) both of those things.

Interpretation

9

For the purposes of qualifying condition (c)—

• (a) companies are associated if one has control of the other or both are controlled by the same person or persons,

• (b) “control” is to be construed in accordance with section 1124 of the Corporation Tax Act 2010 (c.4).

10

In this Part of this schedule, “trade” includes any venture in the nature of trade.

PART 4 — Withdrawal of relief

Overview

11

This Part of this schedule is arranged as follows—

• paragraphs 12 to 14 provide for circumstances in which relief under Part 2 or Part 3 of this schedule is withdrawn or partially withdrawn,

• paragraphs 15 to 21 provide for circumstances in which, despite paragraphs 12 to 14, relief is not withdrawn,

• paragraphs 22 to 28 provide for the withdrawal of relief, which would otherwise not be withdrawn by virtue of paragraph 17 or 19, on the occurrence of certain subsequent events,

• paragraphs 29 to 32 provide for how the tax chargeable is determined where relief is withdrawn or partially withdrawn.

Withdrawal of relief

12

Relief under Part 2 or Part 3 of this schedule is withdrawn or partially withdrawn where paragraphs 13 and 14 apply.

13

This paragraph applies where control of the acquiring company changes—

• (a) before the end of the period of 3 years beginning with the effective date of the transaction which is exempt from charge by virtue of Part 2, or is subject to a reduced amount of tax by virtue of Part 3, of this schedule (“the relevant transaction”), or

• (b) in pursuance of, or in connection with, arrangements made before the end of that period.

14

This paragraph applies where, at the time the control of the acquiring company changes (“the relevant time”), it or a relevant associated company holds a chargeable interest—

• (a) that was acquired by the acquiring company under the relevant transaction, or

• (b) that is derived from a chargeable interest so acquired,

and that has not subsequently been acquired at market value under a chargeable transaction in relation to which relief under this schedule was available but was not claimed.

Case where relief not withdrawn: change of control of acquiring company as result of transaction connected to divorce etc.

15

Relief under Part 2 or Part 3 of this schedule is not withdrawn where control of the acquiring company changes as a result of a share transaction that is effected as mentioned in—

• (a) any of paragraphs (a) to (d) of paragraph 4 of schedule 1 (transactions connected with divorce etc.), or

• (b) any of paragraphs (a) to (d) of paragraph 5 of schedule 1 (transactions connected with dissolution of civil partnership etc.).

16

Relief under Part 2 or Part 3 of this schedule is not withdrawn where control of the acquiring company changes as a result of a share transaction that—

• (a) is effected as mentioned in paragraph 7(1) of schedule 1, and

• (b) meets the conditions in paragraph 7(2) of that schedule (variation of testamentary dispositions etc.).

Case where relief not withdrawn: exempt intra-group transfer

17

Relief under Part 2 or Part 3 of this schedule is not withdrawn where control of the acquiring company changes as a result of an exempt intra-group transfer.

18

But see paragraphs 22 to 24 for the effect of a subsequent non-exempt transfer.

Case where relief not withdrawn: share acquisition relief

19

Relief under Part 2 or Part 3 of this schedule is not withdrawn where control of the acquiring company changes as a result of a transfer of shares to another company in relation to which share acquisition relief applies.

20

But see paragraphs 25 to 28 for the effect of a change in the control of that other company.

Case where relief not withdrawn: controlling loan creditor

21

Relief under Part 2 or Part 3 of this schedule is not withdrawn where—

• (a) control of the acquiring company changes as a result of a loan creditor (within the meaning of section 453 of the Corporation Tax Act 2010 (c.4)) becoming, or ceasing to be, treated as having control of the company, and

• (b) the other persons who were previously treated as controlling the company continue to be so treated.

Withdrawal of relief on subsequent non-exempt transfer

22

Relief under Part 2 or Part 3 of this schedule is withdrawn or partially withdrawn if—

• (a) control of the acquiring company changes as a result of an exempt intra-group transfer, and

• (b) paragraphs 23 and 24 apply.

23

This paragraph applies where a company holding shares in the acquiring company to which the exempt intra-group transfer related, or that are derived from shares to which that transfer related, ceases to be a member of the same group as the target company—

• (a) before the end of the period of 3 years beginning with the effective date of the transaction which is exempt from charge by virtue of Part 2, or is subject to a reduced amount of tax by virtue of Part 3, of this schedule (“the relevant transaction”), or

• (b) in pursuance of, or in connection with, arrangements made before the end of that period.

24

This paragraph applies where the acquiring company or a relevant associated company, at that time (“the relevant time”), holds a chargeable interest—

• (a) that was transferred to the acquiring company by the relevant transaction, or

• (b) that is derived from an interest so transferred,

and that has not subsequently been transferred at market value under a chargeable transaction in relation to which relief under Part 2 or Part 3 of this schedule was available but was not claimed.

Withdrawal of relief where share acquisition relief applied but control of company subsequently changes

25

Relief under Part 2 or Part 3 of this schedule is withdrawn or partially withdrawn if—

• (a) control of the acquiring company changes as a result of a transfer of shares to another company in relation to which share acquisition relief applies, and

• (b) paragraphs 26 to 28 apply.

26

This paragraph applies where control of the other company mentioned in paragraph 25(a) changes—

• (a) before the end of the period of 3 years beginning with the effective date of the relevant transaction, or

• (b) in pursuance of, or in connection with, arrangements made before the end of that period.

27

This paragraph applies where, at the time control of that other company changes, it holds shares transferred to it by the transfer mentioned in paragraph 25(a), or any shares derived from shares so transferred.

28

This paragraph applies where the acquiring company or a relevant associated company, at that time (“the relevant time”), holds a chargeable interest—

• (a) that was transferred to the acquiring company by the relevant transaction, or

• (b) that is derived from an interest so transferred,

and that has not subsequently been transferred at market value under a chargeable transaction in relation to which relief under Part 2 or Part 3 of this schedule was available but was not claimed.

Amount of tax chargeable where relief withdrawn

29

Where relief is withdrawn, the amount of tax chargeable is determined in accordance with paragraph 30.

30

The amount chargeable is the tax that would have been chargeable in respect of the relevant transaction but for the relief if the chargeable consideration for that transaction had been an amount equal to—

• (a) the market value of the subject-matter of the transaction,

• (b) if the acquisition was the grant of a lease, the rent.

Amount of tax chargeable where relief partially withdrawn

31

Where relief is partially withdrawn, the tax chargeable is an appropriate proportion of the amount determined in accordance with paragraph 30.

32

An “appropriate proportion” means an appropriate proportion having regard to—

• (a) the subject-matter of the relevant transaction, and

• (b) what is held at the relevant time by the acquiring company or, as the case may be, by that company and any relevant associated companies.

Interpretation

33

In paragraphs 19 and 25—

• (a) “share acquisition relief” means relief under section 77 of the Finance Act 1986 (c.41), and

• (b) a transfer is one in relation to which that relief applies if an instrument effecting the transfer is exempt from stamp duty by virtue of that provision.

34

In this Part of this schedule, references to control of a company changing are to the company becoming controlled—

• (a) by a different person,

• (b) by a different number of persons, or

• (c) by two or more persons at least one of whom is not the person, or one of the persons, by whom the company was previously controlled.

35

In this Part of this schedule—

• “control” is to be construed in accordance with sections 450 and 451 of the Corporation Tax Act 2010 (c.4),

• “exempt intra-group transfer” means a transfer of shares effected by an instrument that is exempt from stamp duty by virtue of section 42 of the Finance Act 1930 (c.28) or section 11 of the Finance Act (Northern Ireland) 1954 (c.23 (NI)) (transfers between associated bodies corporate),

• “relevant associated company”, in relation to the acquiring company, means a company—that is controlled by the acquiring company immediately before the control of that company changes, andof which control changes in consequence of the change of control of that company.

PART 5 — Interpretation

When are companies members of the same group?

36

Companies are members of the same group if one is the 75% subsidiary of the other or both are 75% subsidiaries of a third company.

When is a company a subsidiary of another company?

37

A company (A) is the 75% subsidiary of another company (B) if B—

• (a) is beneficial owner of not less than 75% of the ordinary share capital of A,

• (b) is beneficially entitled to not less than 75% of any profits available for distribution to equity holders of A, and

• (c) would be beneficially entitled to not less than 75% of any assets of A available for distribution to its equity holders on a winding-up.

38

For the purposes of paragraph 37—

• (a) the ownership referred to in that paragraph is ownership either directly or through another company or companies, and

• (b) the amount of ordinary share capital of A owned by B through another company or companies is to be determined in accordance with sections 1155 to 1157 of the Corporation Tax Act 2010 (c.4).

39

“Ordinary share capital”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company.

40

Chapter 6 of Part 5 of the Corporation Tax Act 2010 (c.4) (group relief: equity holders and profits or assets available for distribution) applies for the purposes of paragraph 37(b) and (c) as it applies for the purposes of section 151(4)(a) and (b) of that Act.

41

But sections 171(1)(b) and (3), 173, 174 and 176 to 178 of that Chapter are to be treated as omitted for the purposes of paragraph 37(b) and (c).

Other definitions

42

In this schedule—

• “arrangements” include any scheme, agreement or understanding, whether or not legally enforceable,

• “non-redeemable shares” means shares that are not redeemable shares.

SCHEDULE 12

The relief

1

A land transaction by which a chargeable interest is transferred by a person (“the transferor”) to a limited liability partnership in connection with its incorporation is exempt from charge if the qualifying conditions are met.

The qualifying conditions

2

The qualifying conditions are—

• (a) that the effective date of the transaction is not more than 1 year after the date of incorporation of the limited liability partnership,

• (b) that at the relevant time the transferor—

• (i) is a partner in a partnership, or

• (ii) holds the interest transferred as nominee or bare trustee for one or more partners in a partnership,

• (c) that at the relevant time the partnership mentioned in paragraph (b) is comprised of all the persons who are or are to be members of the limited liability partnership (and no-one else), and

• (d) that either—

• (i) the proportions of the interest transferred to which the persons mentioned in paragraph (c) are entitled immediately after the transfer are the same as those to which they were entitled at the relevant time, or

• (ii) none of the differences in those proportions has arisen as part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to the tax.

Interpretation

3

In this schedule—

• “limited liability partnership” means a limited liability partnership formed under the Limited Liability Partnerships Act 2000 (c.12) or the Limited Liability Partnerships Act (Northern Ireland) 2002 (c.12 (N.I.)),

• “the relevant time” means—where the transferor acquired the interest after the incorporation of the limited liability partnership, immediately after the transferor acquired it, andin any other case, immediately before the incorporation of the limited liability partnership.

SCHEDULE 13

The relief

1

A land transaction is exempt from charge if the buyer is a charity and the qualifying conditions are met.

Qualifying conditions

2

The qualifying conditions are—

• (a) that the buyer intends to hold—

• (i) the subject-matter of the transaction, or

• (ii) the greater part of that subject-matter,

for qualifying charitable purposes, and

• (b) that the transaction has not been entered into for the purpose of avoiding the tax (whether by the buyer or any other person).

Qualifying charitable purposes

3

A buyer holds the subject-matter of a transaction for qualifying charitable purposes if the buyer holds it—

• (a) for use in the furtherance of the charitable purposes of the buyer or of another charity, or

• (b) as an investment from which the profits are applied to the charitable purposes of the buyer.

Withdrawal of relief

4

Relief under this schedule is withdrawn, or partially withdrawn, if—

• (a) a disqualifying event occurs—

• (i) before the end of the period of 3 years beginning with the effective date of the transaction which was exempt from charge under this schedule (“the relevant transaction”), or

• (ii) in pursuance of, or in connection with, arrangements made before the end of that period, and

• (b) at the time of the disqualifying event the buyer holds a chargeable interest—

• (i) that was acquired by the buyer under the relevant transaction, or

• (ii) that is derived from an interest so acquired.

5

A “disqualifying event” means—

• (a) the buyer ceasing to be established for charitable purposes only, or

• (b) the subject-matter of the relevant transaction, or any interest or right derived from it, being held or used by the buyer otherwise than for qualifying charitable purposes.

6

Where the relevant transaction is exempt from charge by virtue of qualifying condition (a)(ii), the following are also disqualifying events—

• (a) any transfer by the buyer of a major interest in the whole or any part of the subject-matter of the relevant transaction, or

• (b) any grant by the buyer at a premium of a low-rental lease of the whole or any part of that subject-matter,

that is not made for the charitable purposes of the buyer.

7

A lease—

• (a) is granted “at a premium” if there is consideration other than rent, and

• (b) is a “low-rental” lease if the annual rent (if any) is less than £1,000 a year.

8

Where relief is withdrawn, the amount of tax chargeable is the amount that would have been chargeable in respect of the relevant transaction but for the relief.

9

Where relief is partially withdrawn, the amount of tax chargeable is an appropriate proportion of the tax that would have been chargeable but for the relief.

10

An “appropriate proportion” means an appropriate proportion having regard to—

• (a) what was acquired by the buyer under the relevant transaction and what is held by the buyer at the time of the disqualifying event, and

• (b) the extent to which what is held by the buyer at that time becomes used or held for purposes other than qualifying charitable purposes.

11

In relation to a transfer or grant that is, by virtue of paragraph 6, a disqualifying event—

• (a) the date of the event for the purposes of paragraph 4 is the effective date of the transfer or grant,

• (b) paragraph 4(b) has effect as if, for “at the time” there were substituted “ immediately before ”,

• (c) paragraph 10 has effect as if—

• (i) in paragraph (a), for “at the time of” there were substituted “ immediately before and immediately after ”,

• (ii) paragraph (b) were omitted.

Charitable trusts

12

This schedule applies in relation to a charitable trust as it applies to a charity.

13

“Charitable trust” means—

• (a) a trust of which all the beneficiaries are charities, or

• (b) a unit trust scheme in which all the unit holders are charities.

14

In this schedule as it applies in relation to a charitable trust—

• (a) references to the buyer in paragraph 3(a) and (b) are to the beneficiaries or unit holders, or any of them,

• (b) the reference to the buyer in paragraph 5(a) is to any of the beneficiaries or unit holders,

• (c) the reference in paragraph 6 to the charitable purposes of the buyer is to those of the beneficiaries or unit holders, or any of them.

Interpretation

15

• (1) In this schedule, “charity” means—

• (a) a body registered in the Scottish Charity Register, or

• (b) a body which is—

• (i) established under the law of a relevant territory,

• (ii) managed or controlled wholly or mainly outwith Scotland, and

• (iii) meets at least one of the conditions in sub-paragraph (2).

• (2) The conditions are—

• (a) the body is registered in a register corresponding to the Scottish Charity Register,

• (b) the body's purposes consist only of one or more of the charitable purposes.

• (3) A relevant territory is—

• (a) England and Wales,

• (b) Northern Ireland,

• (c) a member State of the European Union other than the United Kingdom, or

• (d) a territory specified in regulations made by the Scottish Ministers.

16

In this schedule, "charitable purposes" has the meaning given by section 106 of the Charities and Trustee Investments (Scotland) Act 2005 (asp 10).

17

In this schedule, “annual rent” means the average annual rent over the term of the lease or, if—

• (a) different amounts of rent are payable for different parts of the term, and

• (b) those amounts (or any of them) are ascertainable at the time of the disqualifying event,

the average annual rent over the period for which the highest ascertainable rent is payable.

SCHEDULE 14

The relief

1

An acquisition of a chargeable interest by a local authority is exempt from charge if the qualifying condition is met.

Qualifying condition

2

The qualifying condition is that the local authority has made a compulsory purchase order in respect of the chargeable interest for the purpose of facilitating the undertaking or achievement of an activity or purpose mentioned in section 189 of the Town and Country Planning (Scotland) Act 1997 (c.8) by another person.

Interpretation

3

For the purposes of this schedule it does not matter how the acquisition is effected (so this provision applies where the acquisition is effected by agreement).

SCHEDULE 15

The relief

1

A land transaction that is entered into in order to comply with—

• (a) a planning obligation, or

• (b) a modification of a planning obligation,

is exempt from charge if the qualifying conditions are met.

The qualifying conditions

2

The qualifying conditions are—

• (a) that the planning obligation or modification is enforceable against the seller,

• (b) that the buyer is a public body, and

• (c) the effective date of the transaction is within the period of 5 years beginning with the date on which the planning obligation was entered into or modified.

“Planning obligation” and “modification”

3

“Planning obligation” means an agreement made under section 75 of the Town and Country Planning (Scotland) Act 1997 (c.8).

4

“Modification” of a planning obligation means modification as mentioned in sections 75A and 75B of that Act.

Public authorities

5

The following are public bodies for the purposes of paragraph 2(b)—

• a local authority,

• the common services agency established under section 10(1) of the National Health Service (Scotland) Act 1978 (c.29),

• a health board established under section 2(1)(a) of that Act,

• Healthcare Improvement Scotland established under section 10A of that Act,

• a special health board established under section 2(1)(b) of that Act,

• any other body that is the planning authority for any of the purposes of the planning Acts within the meaning of the Town and Country Planning (Scotland) Act 1997 (c.8),

• a person prescribed for the purposes of this paragraph by the Scottish Ministers by order.

SCHEDULE 16

The relief

1

A land transaction entered into on, in consequence of or in connection with a reorganisation effected by or under an enactment is exempt from charge if the buyer and seller are both public bodies.

2

The Scottish Ministers may, by order, provide that a land transaction that is not entered into as mentioned in paragraph 1 is exempt from charge if—

• (a) the transaction is effected by or under an enactment specified in the order, and

• (b) either the buyer or the seller is a public body.

Meaning of “reorganisation”

3

A “reorganisation” means changes involving—

• (a) the establishment, reform or abolition of one or more public bodies,

• (b) the creation, alteration or abolition of functions to be discharged or discharged by one or more public bodies, or

• (c) the transfer of functions from one public body to another.

Public bodies

4

The following are public bodies for the purposes of this schedule—

• the Scottish Ministers,

• a Minister of the Crown,

• the Scottish Parliamentary Corporate Body,

• a local authority,

• the common services agency established under section 10(1) of the National Health Service (Scotland) Act 1978 (c.29),

• a health board established under section 2(1)(a) of that Act,

• Healthcare Improvement Scotland established under section 10A of that Act,

• a special health board established under section 2(1)(b) of that Act,

• any other authority that is the planning authority for any of the purposes of the planning Acts within the meaning of the Town and Country Planning (Scotland) Act 1997 (c.8),

• a body (other than a company) that is established by or under an enactment for the purpose of carrying out functions conferred on it by or under an enactment,

• a person prescribed for the purposes of this paragraph by the Scottish Ministers by order.

5

In this schedule, references to a public body include—

• (a) a company in which all the shares are owned by such a body, and

• (b) a wholly-owned subsidiary of such a company.

6

In paragraphs 4 and 5, “company” means a company as defined by section 1 of the Companies Act 2006.

SCHEDULE 17

PART 1 — Overview

Overview

1

• (1) This schedule makes provision about the application of this Act in relation to partnerships.

• (2) It is arranged as follows—

• Part 2 makes general provision about the treatment of partnerships,

• Part 3 makes provision about ordinary transactions involving a partnership,

• Part 4 makes provision about transactions involving transfers from a partner or certain other persons to a partnership,

• Part 5 makes provision about transactions involving transfers from a partnership to a partner or certain other persons (including transfers between partnerships),

• Part 7 makes provision about transfers of interest in, and transactions involving, a property investment partnership,

• Part 8 makes provision about the application of provisions of this Act on exemptions, reliefs, and notification to transactions falling within Parts 4 to 7,

• Part 9 defines expressions used in this schedule.

PART 2 — General provisions

Meaning of “partnership”

2

In this Act, “ partnership ” means—

• (a) a partnership within the Partnership Act 1890 (c.39),

• (b) a limited partnership registered under the Limited Partnerships Act 1907 (c.24),

• (c) a limited liability partnership formed under the Limited Liability Partnerships Act 2000 (c.12) or the Limited Liability Partnerships Act (Northern Ireland) 2002 (c.12 (N.I.)),

• (d) a firm or entity of a similar character to any of those mentioned in paragraphs (a) to (c) formed under the law of a country or territory outside the United Kingdom.

Chargeable interests treated as being held by partners etc.

3

• (1) For the purposes of this Act—

• (a) a chargeable interest held by or on behalf of a partnership is treated as held by or on behalf of the partners, and

• (b) a land transaction entered into for the purposes of a partnership is treated as entered into by or on behalf of the partners,

and not by or on behalf of the partnership as such.

• (2) Sub-paragraph (1) applies notwithstanding that the partnership is regarded as a legal person, or as a body corporate, under the law of the country or territory under which it is formed.

Acquisition of interest in partnership not chargeable except as specially provided

4

The acquisition of an interest in a partnership is not a chargeable transaction, notwithstanding that the partnership property includes land, except as provided by—

• (a) Part 4 of this schedule (transfer of chargeable interest to a partnership),

• (b) paragraph 17 (transfer of partnership interest pursuant to earlier arrangements), or

• (c) paragraph 32 (transfer of interest in property-investment partnership).

Continuity of partnership

5

For the purposes of this Act, a partnership is treated as the same partnership notwithstanding a change in membership if any person who was a member before the change remains a member after the change.

Partnership not to be regarded as unit trust scheme etc.

6

A partnership is not to be regarded for the purposes of this Act as a unit trust scheme or an open ended investment company.

PART 3 — Ordinary partnership transactions

Introduction

7

This Part of this schedule applies to land transactions entered into as buyer by or on behalf of the members of a partnership, other than transactions within Parts 4 to 7 of this schedule.

Responsibility of partners

8

• (1) Anything required or authorised to be done under this Act by or in relation to the buyer in the transaction is required or authorised to be done by or in relation to all the responsible partners.

• (2) The responsible partners in relation to a transaction are—

• (a) the persons who are partners at the effective date of the transaction, and

• (b) any person who becomes a member of the partnership after that date.

• (3) This paragraph has effect subject to paragraph 9 (representative partners).

Representative partners

9

• (1) Anything required or authorised to be done by or in relation to the responsible partners may instead be done by or in relation to any representative partner or partners.

• (2) This includes making the declaration required by section 36 (declaration that return is complete and correct).

• (3) A representative partner means a partner nominated by a majority of the partners to act as the representative of the partnership for the purposes of this Act.

• (4) Any such nomination, or the revocation of such a nomination, has effect only after notice of the nomination, or revocation, has been given to the Tax Authority.

Joint and several liability of responsible partners

10

• (1) Where the responsible partners are liable to make a payment of tax, the liability is a joint and several liability of those partners.

• (2) No amount may be recovered by virtue of sub-paragraph (1) from a person who did not become a responsible partner until after the effective date of the transaction in respect of which the tax is payable.

PART 4 — Transactions involving transfer to a partnership

Overview of Part

11

This Part of this schedule is arranged as follows—

• paragraphs 12 to 16 make provision about the treatment of certain land transactions involving the transfer of a chargeable interest to a partnership,

• paragraphs 17 and 18 provide for certain events following such transactions to be treated as land transactions.

Circumstances in which this Part applies

12

• (1) This Part of this schedule applies where—

• (a) a partner transfers a chargeable interest to the partnership,

• (b) a person transfers a chargeable interest to a partnership in return for an interest in the partnership, or

• (c) a person connected with—

• (i) a partner, or

• (ii) a person who becomes a partner as a result of or in connection with the transfer,

transfers a chargeable interest to the partnership.

• (2) This Part of this schedule applies whether the transfer is in connection with the formation of the partnership or is a transfer to an existing partnership.

• (3) In this Part of this schedule—

• “ the land transfer ” means the transaction mentioned in sub-paragraph (1), and

• “ the partnership ” means the partnership to which the chargeable interest is transferred.

• (4) This paragraph has effect subject to any election under paragraph 35.

Calculation of chargeable consideration etc.

13

• (1) The chargeable consideration for the land transfer is taken to be equal to—

$$MV × ( 100 - SLP ) %$where— MV is the market value of the interest transferred, and SLP is the sum of the lower proportions determined in accordance with paragraph 14.$

• (2) Paragraphs 8 to 10 (responsibility of partners) have effect in relation to the land transfer, but the responsible partners are—

• (a) those who were partners immediately before the transfer and who remain partners after the transfer, and

• (b) any person becoming a partner as a result of, or in connection with, the transfer.

• (3) This paragraph does not apply if the whole or part of the chargeable consideration for the land transfer is rent (see paragraph 29 (application of Parts 3 to 5 to leases)).

Sum of the lower proportions

14

The sum of the lower proportions in relation to the land transfer is determined as follows.

• Step 1 Identify the relevant owner or owners.

• Step 2 For each relevant owner, identify the corresponding partner or partners. If there is no relevant owner with a corresponding partner, the sum of the lower proportions is nil.

• Step 3 For each relevant owner, find the proportion of the chargeable interest to which the owner was entitled immediately before the land transfer. Apportion that proportion between any one or more of the relevant owner's corresponding partners.

• Step 4 Find the lower of the following proportions (“the lower proportion”) for each corresponding partner— the sum of the proportions (if any) of the chargeable interest apportioned to the partner (at Step 3) in respect of each relevant owner,the partner's partnership share immediately after the land transfer.

• Step 5 Add together the lower proportions for each corresponding partner. The result is the sum of the lower proportions.

Relevant owner

15

• (1) For the purposes of paragraph 14 (see Step 1), a person is a relevant owner if—

• (a) immediately before the land transfer, the person was entitled to a proportion of the chargeable interest, and

• (b) immediately after the land transfer, the person is a partner or connected with a partner.

• (2) For the purposes of this paragraph and paragraph 14, persons who are entitled to a chargeable interest as joint owners are to be taken to be entitled to the chargeable interest as common owners in equal shares.

Corresponding partner

16

• (1) For the purposes of paragraph 14 (see Step 2), a person is a corresponding partner in relation to a relevant owner if, immediately after the land transfer—

• (a) the person is a partner, and

• (b) the person is the relevant owner or is an individual connected with the relevant owner.

• (2) For the purposes of sub-paragraph (1)(b) a company is to be treated as an individual connected with the relevant owner in so far as it—

• (a) holds property as trustee, and

• (b) is connected with the relevant owner only because of section 1122(6) of the Corporation Tax Act 2010 (c.4).

Transfer of partnership interest pursuant to earlier arrangements

17

• (1) This paragraph applies where—

• (a) subsequent to the land transfer, there is a transfer of an interest in the partnership (“the partnership transfer”),

• (b) the partnership transfer is made—

• (i) if the land transfer falls within paragraph 12(1)(a) or (b), by the person who makes the land transfer,

• (ii) if the land transfer falls within paragraph 12(1)(c), by the partner concerned,

• (c) the partnership transfer is made pursuant to arrangements that were in place at the time of the land transfer,

• (d) the partnership transfer is not (apart from this paragraph) a chargeable transaction.

• (2) The partnership transfer—

• (a) is to be treated as a land transaction, and

• (b) is a chargeable transaction.

• (3) The partners are taken to be the buyers under the transaction.

• (4) The chargeable consideration for the transaction is taken to be equal to a proportion of the market value, as at the date of the transaction, of the interest transferred by the land transfer.

• (5) That proportion is—

• (a) if the person making the partnership transfer is not a partner immediately after the transfer, the person's partnership share immediately before the transfer,

• (b) if that person is a partner immediately after the transfer, the difference between that person's partnership share before and after the transfer.

• (6) The partnership transfer and the land transfer are taken to be linked transactions.

• (7) Paragraphs 8 to 10 (responsibility of partners) have effect in relation to the partnership transfer, but the responsible partners are—

• (a) those who were partners immediately before the transfer and who remain partners after the transfer, and

• (b) any person becoming a partner as a result of, or in connection with, the transfer.

Withdrawal of money etc. from partnership after transfer of chargeable interest

18

• (1) This paragraph applies where, during the period of 3 years beginning with the date of the land transfer, a qualifying event occurs.

• (2) A qualifying event is—

• (a) a withdrawal from the partnership of money or money's worth which does not represent income profit by the relevant person—

• (i) withdrawing capital from the person's capital account,

• (ii) reducing the person's interest, or

• (iii) ceasing to be a partner, or

• (b) in a case where the relevant person has made a loan to the partnership—

• (i) the repayment (to any extent) by the partnership of the loan, or

• (ii) a withdrawal by the relevant person from the partnership of money or money's worth which does not represent income profit.

• (3) For this purpose the relevant person is—

• (a) where land transfer falls within paragraph 12(1)(a) or (b), the person who makes the land transfer,

• (b) where the land transfer falls within paragraph 12(1)(c), the partner concerned or a person connected with the partner.

• (4) The qualifying event—

• (a) is treated as a land transaction, and

• (b) is a chargeable transaction.

• (5) The partners are taken to be the buyers under the transaction.

• (6) Paragraphs 8 to 10 (responsibility of partners) have effect in relation to the transaction.

• (7) The chargeable consideration for the transaction is taken to be—

• (a) in a case falling within sub-paragraph (2)(a), equal to the value of the money or money's worth withdrawn from the partnership,

• (b) in a case falling within sub-paragraph (2)(b)(i), equal to the amount repaid,

• (c) in a case falling within sub-paragraph (2)(b)(ii) equal to so much of the value of the money or money's worth withdrawn from the partnership as does not exceed the amount of the loan.

• (8) But (in any case) the chargeable consideration determined under sub-paragraph (7) is not to exceed the market value, as at the effective date of the land transfer, of the chargeable interest transferred by the land transfer, reduced by any amount previously chargeable to tax.

• (9) The amount of tax payable by virtue of this paragraph in respect of the qualifying event (if any) is to be reduced (but not below nil) by any amount of tax payable by virtue of paragraph 32 (transfer for consideration of interest in property investment partnership) in respect of the event.

PART 5 — Transactions involving transfer from a partnership

Overview of Part

19

This Part of this schedule is arranged as follows—

• paragraphs 20 to 26 make provision about certain land transactions involving the transfer of a chargeable interest from a partnership,

• paragraph 27 makes special provision where the transaction involves a transfer from a partnership to a partnership,

• paragraph 28 makes special provision where the partnership consists entirely of bodies corporate.

Circumstances in which Part applies

20

• (1) This Part of this schedule applies where a chargeable interest is transferred—

• (a) from a partnership to a person who is or has been one of the partners, or

• (b) from a partnership to a person connected with a person who is or has been one of the partners.

• (2) For the purposes of this paragraph property that was partnership property before the partnership was dissolved or otherwise ceased to exist is to be treated as remaining partnership property until it is distributed.

• (3) In this Part of this schedule—

• “ the land transfer ” means the transaction mentioned in sub-paragraph (1), and

• “ the partnership ” means the partnership from which the chargeable interest is transferred.

• (4) This paragraph has effect subject to any election under paragraph 35.

Calculation of chargeable consideration

21

• (1) The chargeable consideration for the land transfer is (subject to paragraph 28) taken to be equal to—

$$MV × ( 100 - SLP ) %$where— MV is the market value of the interest transferred, and SLP is the sum of the lower proportions determined in accordance with paragraph 22.$

• (2) This paragraph does not apply if the whole or part of the chargeable consideration for the transaction is rent (see paragraph 29 (application of Parts 3 to 5 to leases)).

Sum of the lower proportions

22

The sum of the lower proportions in relation to the land transfer is determined as follows.

• Step 1 Identify the relevant owner or owners.

• Step 2 For each relevant owner, identify the corresponding partner or partners. If there is no relevant owner with a corresponding partner, the sum of the lower proportions is nil.

• Step 3 For each relevant owner, find the proportion of the chargeable interest to which the owner is entitled immediately after the land transfer. Apportion that proportion between any one or more of the relevant owner's corresponding partners.

• Step 4 Find the lower of the following proportions (“the lower proportion”) for each corresponding partner— the sum of the proportions (if any) of the chargeable interest apportioned to the partner (at Step 3) in respect of each relevant owner,the partnership share attributable to the partner.

• Step 5 Add together the lower proportions of each corresponding partner. The result is the sum of the lower proportions.

Relevant owner

23

• (1) For the purposes of paragraph 22 (see Step 1), a person is a relevant owner if—

• (a) immediately after the land transfer, the person is entitled to a proportion of the chargeable interest, and

• (b) immediately before the land transfer, the person was a partner or connected with a partner.

• (2) For the purposes of this paragraph and paragraph 22, persons who are entitled to a chargeable interest as joint owners are taken to be entitled to the chargeable interest as common owners in equal shares.

Corresponding partner

24

• (1) For the purposes of paragraph 22 (see Step 2), a person is a corresponding partner in relation to a relevant owner if, immediately before the land transfer—

• (a) the person was a partner, and

• (b) the person was the relevant owner or was an individual connected with the relevant owner.

• (2) For the purposes of sub-paragraph (1)(b), a company is to be treated as an individual connected with the relevant owner in so far as it—

• (a) holds property as trustee, and

• (b) is connected with the relevant owner only because of section 1122(6) of the Corporation Tax Act 2010 (c.4).

Partnership share attributable to partner

25

• (1) This paragraph provides for determining the partnership share attributable to a partner for the purposes of paragraph 22 (see Step 4).

• (2) Where any tax payable in respect of the transfer of the relevant chargeable interest to the partnership has not been paid under this Act, the partnership share attributable to a partner is zero.

• (3) Where the partner ceases to be a partner before the effective date of the transfer of the relevant chargeable interest to the partnership, the partnership share attributable to the partner is zero.

• (4) In any other case, paragraph 26 applies for determining the partnership share attributable to a partner.

• (5) In this paragraph and paragraph 26, the relevant chargeable interest is—

• (a) the chargeable interest which ceases to be partnership property as a result of the land transfer, or

• (b) where the land transfer is the creation of a chargeable interest, the chargeable interest out of which that interest is created.

26

• (1) Where this paragraph applies, the partnership share attributable to the partner is determined as follows.

• Step 1 Find the partner's actual partnership share on the relevant date. The relevant date— if the partner was a partner on the effective date of the transfer of the relevant chargeable interest to the partnership, is that date,if the partner became a partner after that date, is the date on which the partner became a partner.

• Step 2 Add to that partnership share any increases in the partner's partnership share which— occur in the period starting on the day after the relevant date and ending immediately before the land transfer, andcount for this purpose.The result is the increased partnership share. An increase counts for the purpose of paragraph (b) only if any tax payable in respect of the transfer which resulted in the increase has been duly paid under this Act.

• Step 3 Deduct from the increased partnership share any decreases in the partner's partnership share which occur in the period starting on the day after the relevant date and ending immediately before the land transfer. The result is the partnership share attributable to the partner.

• (2) If the effect of applying Step 3 would be to reduce the partnership share attributable to the partner below zero, the partnership share attributable to the partner is zero.

Transfer of chargeable interest from a partnership to a partnership

27

• (1) This paragraph applies where—

• (a) there is a transfer of a chargeable interest from a partnership to a partnership, and

• (b) the transfer is both—

• (i) a transaction to which Part 4 of this schedule applies, and

• (ii) a transaction to which this Part of this schedule applies.

• (2) Paragraphs 13(1) and 21(1) do not apply.

• (3) The chargeable consideration for the transaction is taken to be what it would have been if paragraph 13(1) had applied or, if greater, what it would have been if paragraph 21(1) had applied.

Transfer of chargeable interest from a partnership consisting wholly of bodies corporate

28

• (1) This paragraph applies where—

• (a) immediately before the land transfer all the partners are bodies corporate, and

• (b) the sum of the lower proportions is 75 or more.

• (2) Paragraphs 21, 27 and 29 have effect subject to the following modifications.

• (3) For paragraph 21 substitute—

(21) The chargeable consideration for the land transfer is taken to be equal to the market value of the interest transferred.

.

• (4) In paragraph 27(2) and (3), for “21(1)” substitute “ 21 ” .

• (5) In paragraph 29—

• (a) in sub-paragraph (2), for “sub-paragraphs (3) to (6)” substitute “ sub-paragraph (5) ” ,

• (b) omit sub-paragraphs (3), (4), (6), (7) and (9).

• (6) Paragraph 22 provides for determining the sum of the lower proportions.

PART 6 — Application of Parts 3 to 5 to leases

Application of Parts 3 to 5 to leases

29

• (1) This paragraph applies in relation to a transaction to which paragraph 12 or 20 applies where the whole or part of the chargeable consideration for the transaction is rent.

• (2) Schedule 19 (leases) has effect with the modifications set out in sub-paragraphs (3) to (6).

• (3) In paragraph 4—

• (a) in Step 1, for “the net present value (NPV) of the rent payable over the term of the lease” substitute “ the relevant chargeable proportion of the net present value (NPV) of the rent payable over the term of the lease ” , and

• (b) in Step 2, for “the NPV” substitute “ the relevant chargeable proportion ” .

• (4) In paragraph 5—

• (a) in Step 1, for “the total of the net present values (TNPV) of the rent payable over the terms of all the leases” substitute “ the total of the relevant chargeable proportions of the net present values (TNPV) of the rent payable over the terms of all the leases ” ,

• (b) in Step 2, for “the TNPV” substitute “ the total of the relevant chargeable proportions ” , and

• (c) in Step 4—

• (i) for “the net present value” substitute “ the relevant chargeable proportion ” , and

• (ii) for “the TNPV” substitute “ the total of the relevant chargeable proportions ” .

• (5) In paragraph 8(1), for “paragraph 9” substitute “ paragraph 13 or 21 of schedule 17 and paragraph 9 of this schedule ” .

• (6) In paragraph 9(6)—

• (a) in paragraph (a), for “the annual rent” substitute “ the relevant chargeable proportion of the annual rent ” , and

• (b) in paragraph (b), for “the total of the annual rents” substitute “ the relevant chargeable proportion of the total of the annual rents ” .

• (7) For the purposes of schedule 19 as modified by this paragraph, the relevant chargeable proportion is—

$$( 100 - SLP ) %$ where SLP is the sum of the lower proportions.$

• (8) The following paragraphs apply for determining the sum of the lower proportions—

• (a) in the case of a transaction to which paragraph 12 applies, paragraph 14, and

• (b) in the case of a transaction to which paragraph 20 applies, paragraph 22.

• (9) In the case of a transaction to which paragraph 20 applies, this paragraph is subject to paragraph 28.

PART 7 — Property investment partnerships

Overview of Part

30

This Part of this schedule is arranged as follows—

• paragraphs 32 to 34 make provision about certain transactions involving the transfer of an interest in a property investment partnership,

• paragraph 35 provides that a property investment partnership may elect to disapply paragraph 12 in relation to certain land transactions.

Meaning of “property investment partnership”

31

• (1) In this schedule, “ property-investment partnership ” means a partnership whose sole or main activity is investing or dealing in chargeable interests (whether or not that activity involves the carrying out of construction operations on the land in question).

• (2) For the purposes of sub-paragraph (1) “ chargeable interests ” includes any interest which would be a chargeable interest but for the fact that it relates to land outwith Scotland.

• (3) In sub-paragraph (1) “ construction operations ” has the same meaning as in Chapter 3 of Part 3 of the Finance Act 2004 (see section 74 of that Act).

Transfer of interest in partnership treated as land transaction

32

• (1) This paragraph applies where—

• (a) there is a transfer of an interest in a property-investment partnership, and

• (b) the relevant partnership property includes a chargeable interest.

• (2) The transfer—

• (a) is treated as a land transaction, and

• (b) is a chargeable transaction.

• (3) The buyer in the transaction is the person who acquires an increased partnership share or, as the case may be, becomes a partner in consequence of the transfer.

• (4) The chargeable consideration for the transaction is taken to be equal to a proportion of the market value of the relevant partnership property.

• (5) That proportion is—

• (a) if the person acquiring the interest in the partnership was not a partner before the transfer, the person's partnership share immediately after the transfer,

• (b) if the person was a partner before the transfer, the difference between the person's partnership share before and after the transfer.

• (6) The relevant partnership property, in relation to a Type A transfer of an interest in a partnership, is every chargeable interest held as partnership property immediately after the transfer, other than—

• (a) any chargeable interest that was transferred to the partnership in connection with the transfer,

• (b) a lease to which paragraph 33 (exclusion of market rent leases) applies, and

• (c) any chargeable interest that is not attributable economically to the interest in the partnership that is transferred.

• (7) The relevant partnership property, in relation to a Type B transfer of an interest in a partnership, is every chargeable interest held as partnership property immediately after the transfer, other than—

• (a) any chargeable interest that was transferred to the partnership in connection with the transfer,

• (b) a lease to which paragraph 33 (exclusion of market rent leases) applies,

• (c) any chargeable interest that is not attributable economically to the interest in the partnership that is transferred,

• (d) any chargeable interest in respect of whose transfer to the partnership an election has been made under paragraph 35, and

• (e) any other chargeable interest whose transfer to the partnership did not fall within paragraph 12(1)(a), (b) or (c).

• (8) A Type A transfer is—

• (a) a transfer that takes the form of arrangements entered into under which—

• (i) the whole or part of a partner's interest as partner is acquired by another person (who may be an existing partner), and

• (ii) consideration in money or money's worth is given by or on behalf on the person acquiring the interest, or

• (b) a transfer that takes the form of arrangements entered into under which—

• (i) a person becomes a partner,

• (ii) the interest of an existing partner in the partnership is reduced or an existing partner ceases to be a partner, and

• (iii) there is a withdrawal of money or money's worth from the partnership by the existing partner mentioned in sub-paragraph (ii) (other than money or money's worth paid from the resources available to the partnership prior to the transfer).

• (9) Any other transfer to which this paragraph applies is a Type B transfer.

• (10) An interest in respect of the transfer of which this paragraph applies is to be treated as a chargeable interest for the purposes of paragraph 15 of schedule 10 to the extent that the relevant partnership property consists of a chargeable interest.

Exclusion of market rent leases

33

• (1) A lease held as partnership property immediately after a transfer of an interest in the partnership is not relevant partnership property for the purposes of paragraph 32(6) or (7) if the following four conditions are met.

• (2) The first condition is that—

• (a) no chargeable consideration other than rent has been given in respect of the grant of the lease, and

• (b) no arrangements are in place at the time of the transfer for any chargeable consideration other than rent to be given in respect of the grant of the lease.

• (3) The second condition is that the rent payable under the lease as granted was a market rent at the time of the grant.

• (4) The third condition is that—

• (a) the term of the lease is 5 years or less, or

• (b) if the term of the lease is more than 5 years—

• (i) the lease provides for the rent payable under it to be reviewed at least once in every 5 years of the term, and

• (ii) the rent payable under the lease as a result of a review is required to be a market rent at the review date.

• (5) The fourth condition is that there has been no change to the lease since it was granted which is such that, immediately after the change has effect, the rent payable under the lease is less that a market rent.

• (6) The market rent of a lease at any time is the rent which the lease might reasonably be expected to fetch at that time in the open market.

• (7) A review date is a date from which the rent determined as a result of a rent review is payable.

Partnership interests: application of provisions about exchanges etc.

34

• (1) Where paragraph 5 of schedule 2 (exchanges) applies to the acquisition of an interest in a partnership in consideration of entering into a land transaction with an existing partner, the interest in the partnership is to be treated as a major interest in land for the purposes of that paragraph if the relevant partnership property includes a major interest in land.

• (2) In sub-paragraph (1) “ relevant partnership property ” has the meaning given by paragraph 32(6) or (7) (as appropriate).

• (3) The provisions of paragraph 6 of schedule 2 (partition etc. : disregard of existing interest) do not apply where this paragraph applies.

Election by property-investment partnership to disapply Part 4

35

• (1) Part 4 of this schedule does not apply to a transfer of a chargeable interest to a property-investment partnership if the buyer in relation to the transaction elects for that Part not to apply.

• (2) Where an election under this paragraph is made in respect of a transaction—

• (a) Part 5 of this schedule (if relevant) is also disapplied,

• (b) the chargeable consideration for the transaction is taken to be the market value of the chargeable interest transferred, and

• (c) the transaction falls within Part 3 of this schedule.

• (3) An election under this paragraph must be included in the land transaction return made in respect of the transaction or in an amendment of that return.

• (3A) For the period allowed for amendment of returns, see section 83 of the Revenue Scotland and Tax Powers Act 2014 (asp 16).

• (4) Such an election is irrevocable and a land transaction return may not be amended so as to withdraw the election.

• (5) Where an election under this paragraph in respect of a transaction (the “main transaction”) is made in an amendment of the land transaction return—

• (a) the election has effect as if it had been made on the date on which the land transaction return was made, and

• (b) any land transaction return in respect of an affected transaction may be amended (within the period allowed for amendment of that return) to take account of that election.

• (6) In sub-paragraph (5) “ affected transaction ”, in relation to the main transaction, means a transaction—

• (a) to which paragraph 32 applied, and

• (b) with an effective date on or after the effective date of the main transaction.

PART 8 — Application of provisions on exemptions, reliefs and notification

Overview of Part

36

This Part of this schedule is arranged as follows—

• paragraph 37 makes general provision about the application of exemptions and reliefs to transactions mentioned in Parts 4 to 7 of this schedule,

• paragraphs 38 and 39 makes provision about the application of group relief to certain transactions mentioned in Part 4 of this schedule,

• paragraph 40 makes provision about the application of charities relief to certain transfers of interest in a partnership,

• paragraph 41 makes provision about the notification of certain transfers of interest in a partnership.

Application of exemptions and reliefs: general

37

• (1) Paragraph 1 of schedule 1 (exemption of transactions for which there is no chargeable consideration) does not apply to—

• (a) a transaction to which Part 4 applies,

• (b) a transaction to which Part 5 applies, or

• (c) a transfer of interest in a partnership which is treated as a land transaction by virtue of paragraph 17 or 32.

• (2) But subject to paragraphs 38 and 40 this schedule has effect subject to any other provision affording exemption or relief from the tax.

Application of group relief

38

• (1) Schedule 10 (group relief) applies with the following modifications to—

• (a) a transaction to which Part 4 applies, and

• (b) a transfer of interest in a partnership which is treated as a land transaction by virtue of paragraph 17.

• (2) For paragraphs 14 and 15 substitute—

(14) This paragraph applies where a partner who was a partner at the effective date of the transaction which is exempt from charge by virtue of this schedule (“the relevant partner” and “the relevant transaction” respectively) ceases to be a member of the same group as the seller— (a) before the end of the period of 3 years beginning with the effective date of the transaction, or (b) in pursuance of, or in connection with, arrangements made before the end of that period. (15) This paragraph applies where, at the time the relevant partner ceases to be a member of the same group as the seller (“ the relevant time ”), a chargeable interest is held by or on behalf of the members of the partnership and that chargeable interest— (a) was acquired by or on behalf of the partnership under the relevant transaction, or (b) is derived from a chargeable interest so acquired, and has not subsequently been acquired at market value under a chargeable transaction for which group relief was available but was not claimed.

.

• (3) For paragraph 19(b), substitute—

(b) what is held at the relevant time by or on behalf of the partnership and to the proportion in which the relevant partner is entitled at the relevant time to share in the income profits of the partnership.

.

• (4) In paragraphs 20 to 42K, for “the buyer” (wherever appearing) substitute “ the relevant partner ” .

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